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Monday, July 27, 2009

From LewRockwell.comBy Ron PaulJuly 27, 2009
Before the Committee on Financial Services, U.S. House of Representatives, July 21, 2009
The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen.
The foolish notion that unlimited amounts of money and credit, created out of thin air, can provide sustained economic growth has delivered this crisis to us.
Instead of economic growth and stable prices it has given us a system of government and finance that now threatens the world financial and political institutions.
Real unemployment is now 20% and there has not been any economic growth since the onset of the crisis in the year 2000, according to non-government statistics.
Pyramiding debt and credit expansion, over the past 38 years, has come to an abrupt end – as predicted by free-market economists.
Pursuing the same policy of excessive spending, debt expansion, and monetary inflation, can only compound the problems and prevent the required correction.
Doubling the money supply didn’t work; quadrupling it won’t work either.
The problem of debt must be addressed.
Expanding debt when it was a principal cause of the crisis is foolhardy.
Excessive government and private debt is a consequence of a loose Federal Reserve monetary policy. Once a debt crisis hits, the solution must be paying it off or liquidating it. We are doing neither.
Net US debt is now 372% of GDP. In the crisis of the 1930s it peaked at 301%.
Household debt services requires 14% of the disposable income – an historic high. Between 2000 and 2007 credit debt expanded five times as fast as gross domestic product. [CONTINUE READING!]